Exceptions to the Alienation Clause Despite its seemingly rigid nature, the alienation clause does have certain exceptions. These include assumable mortgages, second mortgages, transfers to a living trust, divorce, death, and joint tenancy. In these specific scenarios, the alienation clause is not enforceable, allowing for the transfer of property under different conditions. However, these exceptions are subject to specific rules and regulations, and it’s essential for borrowers to understand these nuances to avoid any legal complications.
Alienation Clause versus Acceleration Clause It’s common for people to confuse the alienation clause with the acceleration clause, given their related nature. However, they serve different purposes. An acceleration clause empowers the lender to demand immediate repayment of the loan balance under certain conditions, typically when the borrower fails to honor their commitments as outlined in the loan terms. On the other hand, the alienation clause is activated under any proposed property transfer, irrespective of the buyer’s conduct, except in the aforementioned exceptions.